Axa looks at £2.75bn life sale

The merger of the operation with insurance buyout firm Resolution would create one of the UK's largest protection and group pensions business- es.

Resolution, which is led by insurance entrepreneur Clive Cowdery, bought Friends Provident for just under 2bn last year and is believed to have held discussions with up to nine companies since it was created in 2008.

Axa UK has around 10 million UK customers and employs 11,000 staff in the UK, although the French insurer said it will retain ownership of its UK wealth management business and keep a presence in the general insurance and healthcare markets in the UK.

It added there was no certainty that the talks with Resolution would result in a deal.

However, the cost savings stemming from the merger of the Axa UK life and pensions arm and Friends Provident would inevitably involve job losses.

Resolution predicted "significant cost synergies", mainly from rationalisation of sales and marketing and operations and support costs.

Bristol-based AXA Life was formed in 1997 after the merger of Sun Life Group and AXA Equity & Law.

Axa is known to have been keen to exit the mature UK life assurance market for some time.

Mr Cowdery's first investment vehicle, also called Resolution, was used to buy a string of life funds that had closed to new business, including Abbey National and Swiss Life. He sold the company to Hugh Osmond's Pearl Group for close to 5bn at the end of 2007.

It has said it expects to consolidate three or four businesses by the start of 2011 with a view to selling the group by the end of 2012.

Resolution plans to pay for the Axa deal by raising 2bn in a cash call to investors.

Siobhan Endean, Unite national officer, said the union had commenced consultation with Axa about the possible sale of parts of the life business.

She added: "Our concern at this time centres on the implications of the possible sale of this business for the job security, terms and conditions and pensions of the Axa workforce.

"Unite is also seeking assurances as to the timetable, future consultation, negotiation and union recognition following any sale."

Axa Life employs 3,200 staff, 2,000 of which would transfer to Friends Provident if the deal goes ahead, with the remaining 1,200 employed in Axa Wealth.